The Board of Trustees of the Leland Stanford Junior University v. Agilent Technologies, Inc.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

THE BOARD OF TRUSTEES OF THE Case No. 18-cv-01199-VC

LELAND STANFORD JUNIOR

UNIVERSITY,

ORDER #3 RE CROSS MOTIONS FOR

Plaintiff, SUMMARY JUDGMENT

v. Re: Dkt. Nos. 106, 114, 120, 123

AGILENT TECHNOLOGIES, INC., et al.,

Defendants.

This is the third order to address the cross motions for summary judgment filed by

Stanford and HP/Agilent (Dkt. Nos. 106, 123). The cross motions between HP and Nokia (Dkt.

Nos. 114, 120) are moot due to a settlement between the parties (Dkt. Nos. 183, 185). Part I of

this order addresses the main issues that remain in Stanford’s motion. Stanford’s motion is

denied on those issues. Part II addresses three issues that remain in HP’s cross-motion. HP’s

motion is denied on those issues. Although the parties have raised several issues in their motions

beyond those addressed here, all agreed at oral argument to limit the scope of the motions to the

issues discussed in this ruling. Thus, the motions as to all issues not discussed are denied as

moot.

I.

Stanford’s SJ Motion, Part III.B (Dkt. No. 106). Stanford moves for summary judgment

as to HP’s liability under CERCLA for assessment and evaluation costs relating to the hazardous

substances identified on the property. Private plaintiffs seeking recovery under CERCLA must

prove several elements, two of which are relevant today. The plaintiff must show that there was a

“disposal” during the defendant’s control of the property. Carson Harbor Village, Ltd. v. Unocal

Corp., 270 F.3d 863, 874 (9th Cir. 2001) (en banc). Even then, a plaintiff seeking private party

response costs may recover only “necessary costs of response . . . consistent with the national

contingency plan[.]” 42 U.S.C. § 9607(a)(4)(B). Stanford’s motion is denied because a genuine

dispute exists as to whether there has been a “disposal” and for the additional reason that

Stanford has not shown compliance with the national contingency plan.

First, the “disposal” requirement. CERCLA adopts the definition of disposal provided in

the Solid Waste Disposal Act. Id. § 9601(29). That Act defines “disposal” as the “discharge,

deposit, injection, dumping, spilling, leaking, or placing of any . . . hazardous waste into or on

any land . . . so that such . . . waste or any constituent thereof may enter the environment or be

emitted into the air or discharged into any waters.” Id. § 6903(3). The term “disposal” is not

limited “to the initial introduction of hazardous material onto property.” Kaiser Aluminum &

Chemical Corp. v. Catellus Development Corp., 976 F.2d 1338, 1342 (9th Cir. 1992).

Earthmoving activities that “spread” hazardous material “over uncontaminated portions” of

property count too. Id.; see also PCS Nitrogen Inc. v. Ashley II of Charleston LLC, 714 F.3d 161,

177 (4th Cir. 2013) (collecting cases).

The record evinces a genuine dispute about whether HP spread PCB over uncontaminated

areas of Stanford’s property. All agree that HP dug a trench in 1987 to lay a storm drain. R.109-1

at 8; R.128 at 2. And all agree that HP removed dirt to dig the trench. R.128 at 3; R.115-8 at 14–

15. But the parties contest whether HP, in removing the dirt, simply stockpiled it alongside the

trench before backfilling the area, or instead redistributed any of the hazardous soil to other parts

of the property. R.115-8 at 15. Both sides have submitted competing expert evaluations and hotly

contest how exactly HP handled soil on the property in 1987. The issue is not suitable for

resolution on a motion for summary judgment.

Stanford argues that even if HP only removed the soil, stacked it next to the trench, and

then refilled the trench with that same soil, it still disposed of PCB on the property. And,

Stanford points out, HP admits that it did at least that. But “disposal” does not stretch quite so

far. The statutory text defines disposal as “discharge, deposit, injection, dumping, spilling,

leaking, or placing.” 42 U.S.C. § 6903(3). Each of those terms connotes moving matter from one

place to another. Precedent confirms what the text suggests. Where there has been no “movement

of contaminated soil,” the Eleventh Circuit has said, no “disposal” has occurred. Redwing

Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489, 1510 (11th Cir. 1996). In Redwing, the

evidence suggested that the defendant dug “through soil” to service a gas line. Id. Because “the

only reasonable inference” suggested that “any soil dug up during the process was returned from

whence it came,” the Circuit concluded that “this conduct did not amount to a ‘disposal.’” Id. at

1510–11.

Kaiser does not say otherwise. The Ninth Circuit held that the plaintiff stated a claim by

alleging that the defendant “excavated the tainted soil, moved it away from the excavation site,

and spread it over uncontaminated portions of the property.” Kaiser, 976 F.2d at 1342. That case

does not stand for the proposition that refilling a hole with temporarily stockpiled soil counts as a

“disposal.” Cf. Tanglewood East Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1573

(5th Cir. 1988) (holding that “those who move the waste about the site may fall within the terms

of the provision”). If temporarily lifting soil and backfilling the same hole with the same soil

counts as a “disposal,” CERCLA would hold liable the unassuming gravedigger or random

sandcastle-builder. The statute requires at least some movement of contamination.

Nor has Stanford shown that there is no genuine dispute as to whether HP disposed of

TCE on the property. There is circumstantial evidence supporting Stanford’s view that HP

disposed of TCE: the record shows that HP used TCE in the 1970s and TCE was detected in the

soil near the chemical storage area on the property. R.107-1 at 8. But HP presents admissible

evidence that a prior occupant is responsible for the TCE contamination, having used the same

chemical storage area. R.115-9 at 27; R.127 at 3. A trier of fact will need to sort out whether the

evidence is strong enough to support a finding that HP is responsible for any TCE contamination

identified on the property.

Next, even if it were clear at this stage that HP had disposed of contaminated material,

Stanford has failed to show that it incurred costs “consistent with the national contingency

plan[.]” 42 U.S.C. § 9607(a)(4)(B). Stanford insists that although compliance with the plan is a

prerequisite to recovering actual cleanup costs, it is not a prerequisite to recovering assessment

and evaluation costs. See R.106 at 16 n.3. For support, it cites Palmisano v. Olin Corp., which

noted that “investigatory costs are generally recoverable irrespective of their consistency with the

NCP.” 2005 WL 6777560, at *19 (N.D. Cal. June 24, 2005). There are reasons to doubt

Palmisano’s statement. The statute’s text, for starters, does not differentiate between initial

assessment and evaluation costs and other kinds of costs. Private parties may recover “necessary

costs of response . . . consistent with the national contingency plan.” 42 U.S.C. § 9607(a)(4)(B).

The statute then defines “response” as “remove, removal, remedy, and remedial action.” Id.

§ 9601(25). In turn, “remove” or “removal” means, among other things, “such actions as may be

necessary to monitor, assess, and evaluate the release or threat of release of hazardous

substances.” Id. § 9601(23). The “costs of response” thus include actions to “assess” and

“evaluate,” which means that the statute’s plain terms require that assessment and evaluation

costs be consistent with the national contingency plan. The Ninth Circuit has confirmed the point

by reading “CERCLA’s cost recovery provisions as making no distinction between cleanup and

investigatory costs.” Pakootas v. Teck Cominco Metals, Ltd., 905 F.3d 565, 581 (9th Cir. 2018).

Note too that Palmisano relied on only a handful of cases, and just one appellate

decision, Village of Milford v. K-H Holding Corp., 390 F.3d 926 (6th Cir. 2004), to conclude that

NCP costs need not align with the national contingency plan. But in K-H Holding, the Sixth

Circuit noted that it could find “nothing in CERCLA that exempts” monitoring and investigation

costs “from the requirements of the NCP.” Id. at 934 n.l. First principles aside, the circuit was

“bound to follow” a prior panel decision offering just bare consideration of the issue. Id.; see

Donahey v. Bogle, 987 F.2d 1250, 1255–56 (6th Cir. 1993), vacated on other grounds sub nom.

Livingstone v. Donahey, 512 U.S. 1201 (1994).

Stanford argued at the hearing that the statute’s text is beside the point because the

national contingency plan does not speak to assessment and evaluation costs. But that seems

wrong. The plan provides that “[a] private party response action will be considered ‘consistent

with the NCP’ if the action, when evaluated as a whole, is in substantial compliance with the

applicable requirements” in subsections (c)(5) and (c)(6) “and results in a CERCLA-quality

cleanup.” 40 C.F.R. § 300.700(c)(3)(i). Those subsections relate, at least in part, to assessment

and evaluation costs. One subsection refers to “provisions” that “are potentially applicable to

private party response actions,” including “removal site evaluation.” Id. § 300.700(c)(5)(v)

(citing id. § 300.410, excluding paragraphs (f)(5) and (6)). Another explains that “[p]rivate

parties undertaking response actions should provide an opportunity for public comment

concerning the selection of the response action.” Id. § 300.700(c)(6). By its terms, the plan seems

to include requirements that come into play in incurring assessment or evaluation costs. See

Board of County Commissioners of County of La Plata v. Brown Group Retail, Inc., 768 F.

Supp. 2d 1092, 1115 (D. Colo. 2011) (“I conclude that the plain language of CERCLA dictates

that NCP consistency is a prerequisite to the recovery of investigatory costs associated with the

release of a hazardous substance.”); Angus Chemical Co. v. Mallinckrodt Group, Inc., 1997 WL

280740, at *1 (W.D. La. Mar. 4, 1997) (“To distinguish investigative and monitoring costs from

the standards applicable to other types of response costs, and allow their recovery regardless of

compliance with the NCP or the recovery of other response costs, directly contravenes the plain

language of the Act.”). But see MPM Silicones, LLC v. Union Carbide Corporation, 2016 WL

3962630, at *24 n.39 (N.D.N.Y. July 7, 2016) (collecting cases holding that plan consistency is

not required), vacated on other grounds, 966 F.3d 200 (2d Cir. 2020).

It may well be that Stanford incurred costs entirely consistent with the national

contingency plan. Indeed, it does not seem difficult, given the relative vagueness of the

provisions in the NCP that relate to assessment and evaluation, to demonstrate that costs on these

areas are “consistent” with the plan. But at this stage Stanford has not brought forward any

evidence showing compliance, so it would not be entitled to summary judgment on this issue

even if it had proven definitively that HP disposed of hazardous waste at the facility.

II.

1. HP’s Cross SJ Motion, Part IV.A.3 (Dkt. No. 145-1). HP’s motion for summary

judgment as to the necessity of Stanford’s removal costs is denied. The statute permits private

parties to recover “necessary costs of response.” 42 U.S.C. § 9607(a)(4)(B). The “touchstone for

determining . . . necessity,” according to the Ninth Circuit, “is whether there is an actual threat to

human health or the environment.” Carson Harbor, 270 F.3d at 867. That a party might also

have “a business reason for the cleanup” does not negate necessity. Id. The focus is “not on

whether a party had a business or other motive in cleaning up the property,” but is instead on

whether there is an objective health threat. Id. at 872; see also Pakootas, 905 F.3d at 582;

Johnson v. James Langley Operating Co., Inc., 226 F.3d 957, 963 (8th Cir. 2000).

With the Ninth Circuit’s framing in mind, HP is wrong to argue that a cost is not

“necessary” within the meaning of the statute if the property owner incurred it as part of an

“upgrade” in the use of the property. HP cites G.J. Leasing Co., Inc. v. Union Electric Co., in

which the Seventh Circuit mused that if recovery were not limited to costs necessary for making

the property safe for its existing use, “there would be no check on the temptation to improve

one’s property and charge the expense of improvement to someone else.” 54 F.3d 379, 386 (7th

Cir. 1995). A plaintiff could, for instance, spend far more money to clean up far more pollution,

all because it wants to turn an industrial warehouse into a “hospital” or “dairy products plant.”

Id. But the Ninth Circuit’s reading of “necessary” is hard to square with that approach. The Ninth

Circuit has admonished that necessity does not turn on ulterior business reasons, nor on the

plaintiff’s subjective motivations. Carson Harbor, 270 F.3d at 867. What matters is the objective

threat contamination poses to health or the environment.

The approach advocated by HP would severely constrain the property rights of CERCLA

plaintiffs, in a manner that seems inconsistent with the statute. Just look to this case. Stanford

decided—presumably to address a faculty housing shortage—to convert its real estate into

residential homes. There is nothing unusual about tearing down an old office space or industrial

warehouse to make way for new housing. HP’s view of CERCLA would prevent property

owners from doing what so often proves necessary as decades pass and needs change: convert

land from one use to another. Stanford may have had an “ulterior motive” in cleaning up the

land, but that does not categorically bar recovery. If someone contaminates a property owner’s

land in a way that prevents the owner from putting the property to a desired use (even if the

desired use is different from how the property was being used at the time of the contamination),

the contaminator is generally responsible for the cleanup costs.

HP made a related argument during the hearing: regardless of motive, a property owner

cannot recover costs under CERCLA where it changes the traditional and longstanding use of its

property. In other words, HP contends, CERCLA contains a bright-line rule that: (i) an owner

may recover cleanup costs necessary to allow the property to continue to be used in the way the

owner was using it when the contamination occurred; but (ii) an owner may not recover cleanup

costs associated with changing the use of the property. So where a property owner shifts the use

case of their property, say from industrial to residential, HP contends that CERCLA categorically

bars recovery of costs associated with that change. But again, this argument finds no support in

the text or purposes of CERCLA, unduly constrains the rights of property owners, and cuts

against Ninth Circuit precedent. Property owners are well within their rights to modify the use of

their property over time.

There may well be outer limits on the costs a plaintiff might recover. Were Stanford to

have spent massive sums cleaning up every iota of potential contamination for a quirky purpose

such as constructing a wading pool for infants or a building museum of the world’s cleanest soil,

HP’s argument might be appropriate. But Stanford’s desired use of the property was well within

the range of normal things that owners do with their property, and thus cleanup costs associated

with desired use are “necessary” within the meaning of the statute.

2. HP’s Cross SJ Motion, Part V.C (Dkt. No. 145-1). A genuine dispute exists as to

whether Stanford consented to the disposal of hazardous material on its property, so HP’s motion

for summary judgment on the state law claims based on consent is denied.

HP argues that Stanford consented to the disposal of hazardous materials by approving

HP’s excavation activities and by failing to take immediate action after learning about

contamination. R.192-1 at 23. Consent is a valid defense to nuisance and trespass. But approving

activities on a property is not the same as consenting to contamination resulting from those

activities. In Mangini v. Aerojet-General Corp., the lease included a clause acknowledging “that

certain activities” of the lessee “may be of a hazardous nature and that from time to time

activities conducted on the premises may have an element of nuisance about them or resulting

from them.” 230 Cal.App.3d 1125, 1140 (Cal. Ct. App. 1991) (quoting the lease at issue). Still,

the California appeals court found that the lease was “patently ambiguous with respect to

whether the lease authorized hazardous waste disposal.” Id. The lease did not, for instance,

“identify either the nature of the contemplated hazardous activity nor the nature of the

contemplated nuisance.” Id. In short, that Stanford consented to HP’s use of the property for its

manufacturing activities does not mean, as a matter of law, that Stanford consented to HP’s

disposal of hazardous materials associated with those activities.

HP cites California’s lead paint cases, arguing that where a plaintiff has consented to

bring a product onto their property, they cannot bring a trespass action upon discovering the

product is defective. In County of Santa Clara v. Atlantic Richfield Co., a California appeals

court rejected trespass claims brought by municipalities against lead paint manufacturers: “The

flaw in the proposed trespass cause of action is that . . . the lead was placed on plaintiffs’

property by plaintiffs or with their consent.” 137 Cal.App.4th 292, 314–15 (Cal. Ct. App. 2006).

Santa Clara stands for the proposition that “[w]here the owner of property voluntarily places a

product on the property and the product turns out to be hazardous, the owner cannot prosecute a

trespass cause of action against the manufacturer of that product because the owner has

consented to the entry of the product onto the land.” Id. at 315. By cabining trespass claims for

products that a plaintiff brings onto their own property, Santa Clara prevents property owners

from turning mine-run product liability claims into trespass actions. But this case is different.

Stanford did not bring the contaminants onto its own property. Nor is it attempting to hold HP

liable for product defects arising on its land. Perhaps Stanford’s particular level of knowledge

regarding HP’s activities on the site could result in a finding of fact that Stanford consented, but

the basis HP now offers for summary judgment on that issue is invalid.

3. HP’s Cross SJ Motion, Part V.G (Dkt. No. 145-1). HP’s cross motion barring Stanford

from recovering attorney’s fees is denied. At this stage in the litigation, it remains unclear

exactly how Stanford would seek recovery of attorney’s fees under California law. But that is an

issue that can be settled after trial. Should Stanford prevail, it can bring a motion to recover

attorney’s fees, at which point the issue can be more fully briefed and decided.

IT IS SO ORDERED.

Dated: December 2, 2021

VINCE CHHABRIA

United States District Judge